Home FAQs Risk

Risk

What should I do in times of extreme currency volatility like when COVID-19 hit financial markets?

Events like COVID-19 can impact currencies because they bring uncertainty to global economies. Don’t wait until currency rate fluctuations hurt your bottom line before you make a plan. Managing currency risk is a specialised area. If you don’t have the desire or skills within your business to formulate a strategy, it’s wise to seek outside help. OFXperts can help you to identify opportunities in the market, develop a strategy to stay ahead of currency volatility—and, if time allows, wait for better rates before you choose to lock in a transfer. 

How do I establish my foreign exchange budget?

There are a lot of factors that influence a foreign exchange budget and every business is different. Understanding your business’ forex exposure, knowing your break-even rate, and developing a hedging strategy that works for your business may be a good place to start. 

  • Understand FX Exposure: Know the amount of FX currency your business transfers each year. 
  • Understand your Break-Even Rate: Know the ‘target’ profit and loss level you need to hit as a minimum for your currency transactions. This can give you a better understanding of the amount of risk you can take, and whether you need to ‘fix’ at least some of the exposure you have to currency moves.
  • The Right Hedging Strategy for your Business: Know some common foreign exchange hedging strategies so that you can choose the right hedging strategy for your business.

To learn more about hedging strategies visit our blog.

How often do businesses hedge?

There’s no one size fits all approach to hedging. How often businesses hedge depends on a variety of factors including the business’ FX exposure, risk appetite, and currency needs. Hedging can be an excellent strategy to help protect businesses from market volatility, but not every company will see the benefit. Our OFXperts can help provide you with a variety of hedging strategies so you can decide what works best for your business. Read more.